AirAsia JV in India in choppy waters

July 22, 2020

When AirAsia Berhad announced in April 2013 a joint venture to enter India with two powerful Indian shareholders, Tata Sons and Telstra Group, it was a match made in heaven as they say. Tata Sons Private Limited, the holding company of the vast Tata global conglomerate, is one of India’s biggest industrial groups. It was founded by Jamsetji Tata in 1868. Delhi based Telstra Tradeplace Pvt Ltd which manufactures and supplies precision components for the aerospace industry via Hindustan Aerosystems is controlled by Arun Bhatia. His son Amit Bhatia is married to Vanisha Mittal, the only daughter of LN Mittal of Arcelor Mittal, the world’s largest steel producer. It is very high Indian society that Tony Fernandes had signed a deal with for AirAsia. According to a Business Standard report, Amit Bhatia, one of two sons of Arun Bhatia, even tweeted about the venture, saying it was hugely exciting “involving my family, Tata Sons and the coolest guy around – Tony Fernandes.” Telstra Tradeplace took up 21% and Tata Sons 30%. The balance was held by AirAsia Berhad 49% because India’s regulations only allow foreign airlines to own a maximum of 49% in local carriers.  

Things didn’t quite work out for many reasons as reported in the local Indian press, one of which was the alleged interference with the management of AirAsia India by Tony Fernandes. The Bhatia family left rather unhappily and sold the bulk of their stake to Tata Sons. Now with covid pandemic straining finances at AirAsia India, Tata Sons may be exiting too according to a July 13 2020 report by AviationIndia. They are no longer interested to pump in more capital to shore up AirAsia India. Tata Sons has another airline JV with Singapore Airlines Limited (51%:49%) called Vistara under the company TATA SIA Airlines Ltd which was inked in October 2013. The brand name ‘Vistara’ is derived from the Sanskrit word ‘Vistaar’ that means ‘a limitless expanse’.

No doubt the narrative will continue to unfold in the weeks to come.

 

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  1. ET Bureau. 29 March 2016. Tata Sons increases stake in Air Asia India to 49%, equal to AirAsia Berhad. https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/tata-sons-increases-stake-in-airasia-india-to-49-equal-to-airasia-berhad/articleshow/51581067.cms utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
  2. The Hindu. Business Line. 19 July 2020. K.Giriprakash. Bengaluru. How AirAsia Bhd cashed in even as JV with Tatas flew into the red. https://www.thehindubusinessline.com/economy/logistics/how-airasia-bhd-cashed-in-even-as-jv-with-tatas-flew-into-the-red/article32132141.ece
  3. Aviation India. 13 July 2020. Tata Group looking to exit loss making AirAsia India. https://www.aviationindia.net/2020/07/tata-group-looking-to-exit-loss-making.html
  4. AirAsia Berhad. Bursa Announcement. 18 April 2013 . AirAsia India Joint Venture. https://ir.airasia.com/newsroom/AirAsia_India_Joint_Venture.pdf
  5. Business Standard. 21 February 2013. Who is Arun Bhatia? https://www.business-standard.com/article/companies/who-is-arun-bhatia-113022100028_1.html
  6. The Economic Times. ET Bureau. 3 June 2018. Anirban Chowdhury. Double trouble: AirAsia CEO Tony Fernandes faces tough time both in India and Malaysia.  www.economictimes.indiatimes.com
  7. Vistara. TATA SIA Airlines Ltd. Background and History. https://www.airvistara.com/in/en/company-info

 

This article is part of our ongoing research on the book "Malaysian Entrepreneurs".